MS Residual Market Burden


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Mississippi Residual Market Burden

House Bill 1091 states "the Commissioner shall design the assigned risk plan in such a manner that the plan should become self-supporting with no outside assessments."

Reducing the size of the residual market relative to the voluntary market is essential to a healthy workers' compensation system. The following chart shows that this has effectively been accomplished in Mississippi. 


Simply reducing its size, however, is not sufficient. In order to accomplish the mandate of H.B. 1091 recited above, it is necessary to eliminate residual market operating deficits...and thus the residual market burden. Operating deficits were eliminated beginning with policy year 1993. The following chart shows the residual market approaching the ideal operating point - at or near zero gain/loss. 



The operating losses of the residual market are funded by Pool members through assessments based on each member's prorata share of the voluntary market. These operating losses, when expressed as a percentage of voluntary premiums written, are referred to as the residual market burden. A residual market burden of 25 percent means that 25 cents of every voluntary premium dollar must go to support the residual market. Though not nearly as high as the burden of some other states, Mississippi's residual market burden had been sizable for several years, reaching almost 29 percent in 1992. The following charts shows the residual market burden actually became a "non-burden" in 1993 and is currently insignificant - at or near zero. 





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